"Sowing the Oil" in the Venezuelan

The intensity of the confrontation in April rose to dangerous levels that could result in a social explosion. In jeopardy important aspects of life of the population and the country's international obligations. Of particular importance was the government's conflict with the staff in Latin America's largest oil company, PDVSA. At a ceremony in early April, the Assembly decided to PDVSA workers in protest against the government to begin reducing gas production. By April 7 the reduction was 10%. Decline in oil production in mid-April, when there was a temporary removal of the President, was over 60%.

After the coup

After the failed coup and the return to power of Hugo Chavez political and economic situation in the country has run out. Strikes and distrust of investors led to a decline in production, the state budget was a large deficit. To recover lost ground, the president had to be solved, at least two objectives: to establish a dialogue with the opposition and restore the confidence of domestic and foreign investors.

Meeting these challenges will depend on a number of conditions of political and economic considerations, such as the revision of the laws adopted by presidential decree, the satisfaction of union demands for higher wages and pensions, additional capacity to attract foreign capital.

The president had to make significant concessions. The most important of these include the reinstatement of the dismissed board members and other leaders of PDVSA. While Chavez was appointed President of the company is highly respected in the country and abroad, the Secretary General of OPEC A. Rodriguez. Have been appointed new ministers of the economic block. Began a review of the laws. In particular, in the National Assembly, many called for the recognition of erroneous article 9 of the coastal zone, announcing the state-owned property located in the coastal strip. In May 2002, has been raised the minimum wage.

In late May, the new Minister of Finance T. Nobrega proposed stabilization package, entitled "Proposals to reach an agreement." The main purpose of the package of measures - reducing the budget deficit, stabilization of prices in the medium to long term, and increase on this basis of investor confidence to the government and the population rate. Venezuela's budget deficit at the end of May 2002 was estimated at $ 9 billion, or 8.7% of GDP. 6% of them were in service of domestic and external debt, and 2.7% - for other purposes. Reduction of budget expenditures as a result of government action should have been 17%. About $ 4 billion in government intends to seek from additional tax revenues, loans from international financial institutions, placement of bonds in international capital markets. The remaining resources are provided to obtain mainly due to the increase in domestic debt.

Despite government concessions, opposition groups demanded the resignation of Chavez and held mass protests. Political confrontation has led to falling production. According to the Minister of Finance, the decline of GDP for this year could reach 3.5%, according to the IMF - 5%.